Moving closer to its goal of becoming a financial conglomerate, Ping An Insurance (Group) has finalised the plan to obtain a controlling stake in Shenzhen Development Bank (SDB) in a 29.1 billion yuan (HK$33.2 billion) deal, which will help it strengthen its banking network on the mainland.
The deal, which will increase Ping An's stake in SDB to 52 per cent from 29.9 per cent, is seen as an inexpensive way for it to gain control of the bank, which is more profitable than its own banking arm, Ping An Bank. It would also help avoid competition between the two banks, as they would be merged within a year, Ping An Insurance management said yesterday.
'After merging with Ping An Bank, SDB will become a medium-sized commercial bank on the mainland,' Louis Cheung Chi-yan, general manager of Ping An Insurance, said yesterday. The deal has been approved by the China Securities Regulatory Commission and is pending approval by SDB's board and the shareholders of Ping An Insurance and Ping An Bank.
'In the long run, we would like to strike a balance between the contributions from our insurance and non-insurance businesses,' Cheung said.
The merger enabled the group to use the nationwide banking network and sell insurance products to bank customers, the management said.
The insurer agreed to pay 2.69 billion yuan in cash and a 90.75 per cent stake in Ping An Bank in exchange for 1.639 billion new shares in Shenzhen-listed SDB.